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As Democrats close in on their goal of overhauling the nation’s financial regulations, several prominent experts say that the legislation does not even address the right problems, leaving the financial system vulnerable to another major crisis.

Some point to specific issues left largely untouched, like the instability of capital markets that provide money for lenders, or the government’s role in the housing market, including the future of the housing finance companies Fannie Mae and Freddie Mac.

“Until we understand what the causes were, we may be implementing ineffective and even counterproductive reforms,” said Andrew W. Lo, a finance professor at the Massachusetts Institute of Technology. “I understand the need for action. I understand the need for something to be done. But what I expect from political leaders is for them to demonstrate leadership in telling the public that we need to proceed about this in a much more deliberate and rational and thoughtful way.”

Sounds like a fear-mongering friend of Wall Street to me.

Senate Republicans echoed some of these concerns as they delayed debate on the legislation last week.

Since the New York Times is now putting the concerns of Senate Republicans and "a diverse group of [expert] critics" in the same paragraph, maybe that means Republicans should have stuck with opposition to this vision of reform.

More experts:

Gary B. Gorton, a finance professor at Yale, said the financial system would remain vulnerable to panics because the legislation would not improve the reliability of the markets where lenders get money, by issuing short-term debt called commercial paper or loans called repurchase agreements or “repos.”...

Lawrence J. White, a finance professor at New York University, said it made no sense to overhaul financial regulation without addressing the future of federal housing policy. He said he was trying to find the strongest possible words to describe the omission of Fannie Mae and Freddie Mac from the legislation.

“It’s outrageous,” he finally said.

Another expert, with an unfortunate last name:

“The Dodd bill is almost entirely irrelevant,” Mr. Vigilante said in a telephone interview. “All it does is strengthen what we’ve had for years,” a system that depends on judgments made by regulators behind closed doors.